India has held talks with the US to seek clarity on a proposed mechanism to provide insurance for oil tankers and other vessels transiting the Strait of Hormuz, according to a government official familiar with the matter.
President Donald Trump said this week that the US International Development Finance Corporation would offer cover to help maintain the flow of energy and other trade in the Gulf. Oil prices have surged since the US and Israel began attacks on Iran, triggering disruptions in the region and halting oil flows via the chokepoint, through which a fifth of the world's energy trade transit.
India faces heightened risks as about 40% of its crude imports pass through the narrow Persian Gulf route. Mangalore Refinery and Petrochemicals Ltd., a unit of state-run Oil and Natural Gas Corp., has closed a crude distillation unit due to shortages.
To manage the situation, India is in talks with global state-owned oil companies and traders for the purchase of crude and liquefied petroleum gas from their international stockpiles that do not flow via the Strait of Hormuz, said the official, who asked not to be identified due to the sensitivity of the matter.
Despite the setback, crude and refined product inventories remain comfortable and there is no need to halt fuel exports as of now, the official said.
The impact is also being felt in the gas market. Liquefied natural gas supplies have been disrupted after QatarEnergy halted operations at its Ras Laffan facility — the world's largest LNG export plant — following Iranian drone strikes. India meets about half of its gas demand through imports, with Qatar accounting for roughly half of those shipments.
To plug the gap, the world's fourth-largest LNG importer is seeking volumes of the supercooled fuel from alternative sources, the official said. It will also reprioritize sales of locally produced gas to industrial consumers, the official said, without elaborating. As per the existing policy, households, automobiles, and the fertilizer industry get priority allocations of locally produced gas.
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